Intraday Market Thoughts

Spanish Auction Solid; Philly FED Next

by Patrik Urban
Sep 20, 2012 13:35

French manufacturing PMI drops; German and European PMI rose; UK retail sales weakened; Spanish auction. Market turns to jobless claims and Philly FED. Ashraf's latest Premium Insights are out. See final paragraph for direct access.

The greenback was gaining throughout Asia and at the beginning of the London session but it has lost a part of its gains. European equities are losing about 0.75% and the relative strength winner is JPY while EUR lags.

The pressure on the common currency intensified after French manufacturing PMI fell in September to three and a half year low at 42.6 from 46.0. German manufacturing PMI that rose to 47.3 from 44.7 and the Eurozone equivalent that rose to 46.0 from 45.1 could not stop the selling and EURUSD declined to 1.2929.

UK retail sales fell 0.3% in August from a previous flat reading m/m and the annual figure slowed to 3.1% from 3.3%. The Olympics have distorted the data so more releases are needed to gauge the strength of the retail sector. GBPUSD trades around 1.6185 and EURGBP fell to 0.7988.

Spanish auction was solid today as Spain sold bonds totaling EUR 4.799 bln vs. 4.5 bln target. The 2015 bond had average yield 3.845% from 2.798 but January 2022 bond saw a significantly lower yield at 5.666% from 6.647%. The cover was also higher: 2.8 vs. previous 2.4.

The US session begins at 8:30 am ET with jobless claims that are seen lower at 374K from previous 382K followed by the Atlanta FED president and the FOMC member Dennis Lockhart's speech on workforce development at 9:30 am.

Philly fed manufacturing is due at 10:00 am ET and it is expected to improve in September to -4.1 from previous -7.1. Even though the index remained below zero it has shown an improvement over the past three months back to back. The GBP could react to the BOE governor Mervyn King's interview in London that begins at 2:00 pm

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